Commercial lawLooking on the horizonMary Kelly, Senior Associate4 October 2012
Topics• proposed Common European Sales Law• Eurozone crisis – mitigating contract risks• Groceries Code – Adjudicator Bill• a year on from the Bribery Act
Proposed Common European SalesLaw – what is it?• proposed optional sales law to facilitate EU cross border transactions• restricted to: – sale of goods; – sale of digital content; and – services directly related to the goods / digital content (eg repair and installation)• applies to B2C and B2B contracts where at least one party is an SME• terms cover the life cycle of a contract• mandatory provisions eg good faith and fair dealing
Proposed Common European SalesLaw – likely impact?• 2 parallel systems in each Member State• businesses may potentially need 3 sets of terms to manage: – domestic transaction terms – EU cross-border transaction terms (CESL) – worldwide transaction terms• increase in cost and complexity?• benefit?
Proposed Common European SalesLaw – next steps• approval by European Parliament and the Council of Ministers (by 1 January 2013).• implementation 6 months following approval
Eurozone crisis – mitigating contractrisks – key considerations• price: – currency – definition of “Euro” – exchange rate provisions• place of payment• governing law and jurisdiction
Eurozone crisis – mitigating contractrisks – contract analysis• interaction with other contract clauses – force majeure – change in law – termination• risk profile of the deal – right to renegotiate price – termination right – material adverse change clause
Eurozone crisis – mitigating contractrisks - practical tips• identify key / material contracts• analysis of contracts for terms to identify possible risks• consider whether variations required to existing contractual relationship• draft future contracts to minimise risks
Groceries Code Adjudicator Bill• Groceries Code Adjudicator Bill (May 2011) sets out: – Statutory basis for Groceries Code Adjudicator (“GCA”) – Functions and powers of the GCA – Funding the GCA• independent appointment• initial term - up to 4 years• mechanism for dealing with breaches of the GSCOP by retailers
Groceries Code Adjudicator Bill -functions and powers• arbitration: referred by the supplier• investigation: initiated by the GCA. Ability to consider information from any source (subject to review)• enforcement: – publication of investigation – fines (requires authorisation of Secretary of State)• advice and guidance: through publications or directly to either retailer or supplier
Groceries Code Adjudicator Bill –potential impact?• increase in referral of disputes?• promote retailer compliance with GSCOP?• redress “balance of power” between suppliers and retailers?
Bribery Act – a year on• no high profile corporate prosecution...yet• so far only one minor prosecution under the Act• Oxford Publications investigation – £1.9 million voluntary settlement
Bribery Act – a year on• international businesses placed emphasis on Bribery Act compliance• non UK entities using UK Ministry of Justice guidance to ensure they have adequate defence in place• rising number of organisations and countries are placing importance on anti-bribery / corruption
Bribery Act – a year on• risk analysis on contract-by-contract basis• due-diligence into anti-bribery procedures of contracting parties• regular statement of compliance with anti-bribery provisions• remedies for breach: – termination – liquidated damages – forced removal of employees/directors